Why fast failures make US startups a betterbet than those in the UK15 January 2016, by Reuben Wilcock, University Of Southampton

CurveStar, a curveball pitched to investors at CES - butfew UK firms have the opportunity. Credit: FutureWorlds,Author provided

Eureka Park, Las Vegas: not a housing estate, but"the hall of hopes and dreams" – aisle after aisle ofentrepreneurs showing off their wares as part ofthe Consumer Electronics Show, the biggest techgadget show in the world. CES, opening in earlyJanuary for a week each year, is a hive filled withboth startup companies and their innovations andtech giants and global brands showing off theirlatest products.

From our booth, 80826, located at the heart of this extraordinary exhibition space, I could almost tastethe opportunity in the air. I had flown with my team5,200 miles from the UK as director of FutureWorlds, a startup incubator at the University ofSouthampton with a mission to help aspiringentrepreneurs get their ideas out into the world.

My career has straddled both academia andindustry, and I'm painfully aware of the manyuntapped opportunities hidden among universitiesaround the country. I've devoted the last few yearsto nurturing a Silicon Valley-style startup culture at

Southampton, with the hope of coaxing some of thispotential into existence. In the UK, unlike in the US,this is much harder than it should be.

Since I left my last spin-out company, I've beenfascinated with the phenomenal track record ofentrepreneurship at Stanford University in the US.Almost 40,000 active companies can trace theirroots to the university. Between them they generateannual revenues of US$2.7 trillion and havecreated 5.4m jobs since the 1930s. Despite rankingas global leaders in innovation, universities in theUK cannot boast anything like such a record. Theyare still inefficient in converting the undeniablyexcellent research their academics produce intomeaningful impact through commercialisation, orlicensing, or spin-outs companies. And that'swithout considering the thousands ofentrepreneurial undergraduate students desperateto create success on the scale of their UScounterparts.

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SharkStream’s motion capture technology. Credit:Future Worlds, Author provided

At CES we were promoting 12 startups to a trulyglobal audience of other firms, investors and thepress. We'd come equipped to demonstrate twoproducts in particular: SharkStream, a cutting-edgemotion capture system for the gaming industry, andCurveStar, which allows the lighting of an object tobe altered after a photo has been taken. With manyUS startups around us, the similarities anddifferences faced by entrepreneurs in the twocountries were apparent.

Common to both were the determination, drive, andsometimes misguided belief that one's product orservice will improve the lives of millions around theworld. Where the similarities end is the level ofsupport, investment and time-to-market – as well asthe definition and treatment of failure.

Raising capital is critical for any new company, andperhaps the greatest difference between the USand UK is access to funding. Each and every day atCES we were approached by countless venturecapital partners and business angel investors, keento find out more about the products and themarkets they would disrupt. The US startup firm inthe booth opposite offered technology to optimiseimages on smartphone screens when theirbrightness was turned down. They'd raised seedfunding of US$500,000 and were about to embarkon a Series A funding round aiming for US$3m. Butin Britain these figures are typically two to five timeslower.

The ability to raise investment on this scale early onbuys talent, which reduces time-to-market in whatis all too often a very crowded space. When USstartups fail, they fail fast and the founders move onto the next opportunity, an experience consideredto be positive by investors. In the UK, a failedstartup can be a millstone around an entrepreneur'sneck as they try to raise funds for future ventures.

At Future Worlds we try to address thesechallenges with an environment that links investors,mentors and experienced entrepreneurs withtomorrow's aspiring innovators. By fostering theserelationships early on it's possible to tackle the(typically British) reticence to ask for help. We alsobuild links with the most prolific startup, investorand manufacturing centres worldwide – connectingSouthampton with Silicon Valley and Shenzhen.

To really make a difference the UK government andfunding bodies need to see universities for whatthey are: a hotbed of potential startups, and one ofour best engines of economic growth. They shouldfocus on the long term process of fostering asupportive startup culture, not the short termsticking plaster of putting money into individualfirms. We should seed our own startup culture thatmaintains the best of British innovation whileadopting the investment model and support foundacross the pond. Put that in place, and theinvestors will take care of the funding themselves.

This article was originally published on TheConversation. Read the original article.

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Source: The ConversationAPA citation: Why fast failures make US startups a better bet than those in the UK (2016, January 15)retrieved 9 July 2018 from https://phys.org/news/2016-01-fast-failures-startups-uk.html

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